Thursday, January 17, 2013

Papua New Guinea prepares for an Asian Century

In
late 2012 Papua New Guinea Prime Minister Peter O’Neill delivered a
series of speeches that give clues to the country’s growth and political
aspirations.

Peter O'Neill

For
some time, observers of the country have been kept on a slim diet of
academic analysis or fragmented news items for their understanding of
the country and the intentions of its political leaders.
As PNG emerges from a politically disruptive past two years, O’Neill has been speaking out abroad. At the Bali Democracy Forum and the Lowy Institute for International Policy,
O’Neill clarified his government’s objectives over its five-year term.
Two broad priorities can be drawn from his remarks. First, O’Neill wants
to increase the proportion of citizens who participate in and benefit
from the resource economy. Second, the government wants to upgrade PNG’s
national infrastructure and increase productivity.
Both goals
depend considerably upon PNG’s economic relationship with Asia. PNG has
vast stockpiles of copper, gold and nickel, and there is a steady roster
of countries — China, Japan, Korea, Malaysia, the Philippines and
Singapore — increasingly interested in purchasing and investing in its
minerals. Supplemented by a lucrative future in Liquefied Natural Gas,
the country’s GDP growth is currently at 9 per cent and is expected to
almost double by 2016.
While it is easy to be euphoric about PNG’s
trade and investment relationships in Asia, they will be geared toward
shared interests and not values. PNG is a political outlier in Asia. It
has a chaotic Westminster democracy, a political system only India, of
Asian nations, is able to understand. This is important to note,
especially at the cusp of a resources boom, because it will make it
difficult for PNG to create meaningful ‘non-business’ alliances with its
Asian trading partners. With that in mind, PNG should consider Lord Palmerston’s
well-worn dictum that ‘nations have no permanent friends or allies,
they have only permanent interests’ as it becomes more intertwined with
Asia.
In order to sustain its resource commitment to Asia, PNG will need to build a decent national infrastructure. In O’Neill’s words:
‘You cannot grow an economy in a first-rate way with third-rate
infrastructure’. PNG’s most recent budget commits $12 billion kina
(US$5.8 billion), over five years, to upgrading the nation’s highways,
roads and ports. To place this fiscal commitment in context, $12 billion
kina is equal to PNG’s total national budget in one year.
But
PNG’s infrastructure problems are not due to a historical lack of
investment and overseas assistance. PNG’s 700km Highlands Highway, for
example, which is a relic of PNG’s infrastructure failure, has received
billions in funding and overseas aid with very limited results. Still, while rhetoric around large-scale public infrastructure in PNG should be treated with some caution, the renewed political focus on the sector is welcome, particularly in the context of a growing economic imperative from Asia.
On
O’Neill’s radar, too, are government measures to improve productivity —
an area on which he says that it ‘has never really focused’. PNG is not
the only developing state with abundant natural resources, and the
government is aware that it will have to supply its buyers more
efficiently in the coming years to remain globally competitive.
If the government listens more carefully to PNG’s business sector and
implements their suggestions, which range in areas from law and order to
skilled labour, it can realise productivity gains.
While
O’Neill has given some clarity to the intentions of his government
until the 2017 national election, a more enduring guide may lie in the
production of a well thought-out and measured foreign policy document.
Australia recently completed an Asian Century White Paper, and a PNG
equivalent is at least worth discussing. PNG has used similar documents
in the past — it issued the PNG Foreign Policy White Paper in
1982, for example. But the appetite for such papers seemed to have
disappeared as the country lurched from one political crisis to the
next.PNG Vision 2050,
published in late 2009, is the PNG government’s latest attempt to bring
the nation’s goals together across a range of sectors. The very brief
‘international relations’ section outlined four objectives, including
directing aid to national priorities, establishing Trade Commission
Offices in relevant countries, increasing bilateral and multilateral relations
in international forums, and ensuring the country’s foreign policy
reflects the national interest. Should the government wish to pursue an
Asian engagement strategy, these objectives may be a fair place to
start.
Finally, O’Neill seems aware that PNG cannot live on extracting resources
forever. In his Lowy Institute speech, for example, he stated that PNG
had become ‘relaxed and comfortable’ and perhaps ‘complacent’ in
exporting minerals and forestry. This raises valid questions for
potential growth sectors outside of resources such as agriculture and
perhaps tourism. These sectors also depend on infrastructure and
productivity, so O’Neill’s two priorities could broaden PNG’s economy.
While a gap between rhetoric and results is common in PNG politics, many
of the country’s citizens, and at least parts of Asia, will be watching
PNG’s government more closely than ever.

Sean Jacobs is a
former Australian youth volunteer in the Pacific and has worked with all
levels of government in Papua New Guinea.

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